Correlation Between Anheuser Busch and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and MAGIC SOFTWARE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Anheuser Busch and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anheuser Busch InBev SANV and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on Anheuser Busch and MAGIC SOFTWARE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Anheuser Busch with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and MAGIC SOFTWARE.
Diversification Opportunities for Anheuser Busch and MAGIC SOFTWARE
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Anheuser and MAGIC is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and MAGIC SOFTWARE ENTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGIC SOFTWARE ENTR and Anheuser Busch is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Anheuser Busch InBev SANV are associated (or correlated) with MAGIC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGIC SOFTWARE ENTR has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between Anheuser Busch and MAGIC SOFTWARE
Assuming the 90 days trading horizon Anheuser Busch InBev SANV is expected to under-perform the MAGIC SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch InBev SANV is 2.21 times less risky than MAGIC SOFTWARE. The stock trades about -0.25 of its potential returns per unit of risk. The MAGIC SOFTWARE ENTR is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in MAGIC SOFTWARE ENTR on September 3, 2024 and sell it today you would earn a total of 200.00 from holding MAGIC SOFTWARE ENTR or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anheuser Busch InBev SANV vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| Anheuser Busch InBev |
| MAGIC SOFTWARE ENTR |
Anheuser Busch and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser Busch and MAGIC SOFTWARE
The main advantage of trading using opposite Anheuser Busch and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, MAGIC SOFTWARE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MAGIC SOFTWARE will offset losses from the drop in MAGIC SOFTWARE's long position.| Anheuser Busch vs. Sqs Software Quality | Anheuser Busch vs. Corporate Office Properties | Anheuser Busch vs. CITY OFFICE REIT | Anheuser Busch vs. Take Two Interactive Software |
| MAGIC SOFTWARE vs. TOTAL GABON | MAGIC SOFTWARE vs. Walgreens Boots Alliance | MAGIC SOFTWARE vs. Peak Resources Limited |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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